Market Roundup
- Gold gains on rate cut hopes
- Oil falls for fifth day on virus spread
Economic Data Ahead
- (0400 ET/0900 GMT) Italy Business Confidence (Feb)
- (0400 ET/0900 GMT) Italy Consumer Confidence (Feb)
- (0400 ET/0900 GMT) EZ Private Loans (YoY) (Jan)
- (0400 ET/0900 GMT) EZ M3 Money Supply (3m) (Jan)
- (0400 ET/0900 GMT) EZ M3 Money Supply (YoY) (Jan)
- (0400 ET/0900 GMT) EZ Services Sentiment (Feb)
- (0400 ET/0900 GMT) EZ Consumer Confidence (Feb)
- (0400 ET/0900 GMT) EZ Industrial Confidence (Feb)
- (0400 ET/0900 GMT) EZ Business Climate (Feb)
- (0400 ET/0900 GMT) EZ Economic Sentiment Indicator (Feb)
Key Events Ahead
- (0530 ET/1030 GMT) BoE's Cunliffe speech
- (0530 ET/1030 GMT) EZ 5-y Bond Auction
- (0530 ET/1030 GMT) 10-y Bond Auction
- (0715 ET/1215 GMT) ECB's Lane speech
FX Beat
DXY: The dollar index tumbled to a 2-week low as investors increased bets for a rate cut by the U.S. Federal Reserve to ease the impact of coronavirus on the economy. The greenback against a basket of currencies traded 0.3 percent down at 98.89, having touched a low of 98.86 earlier, its lowest since Feb. 13.
EUR/USD: The euro surged to a 2-week peak as the spread of coronavirus outside of China pushed traders to ramp up stimulus expectations. Investors now fully price in a December rate cut from the European Central Bank. The European currency traded 0.2 percent up at 1.0907, having touched a high of 1.0914 earlier, its highest since Feb. 12. Investors’ attention will remain on a series of data from the Eurozone economies, EZ consumer sentiment indicator and ECB Lane, ahead of the U.S. prelim gross domestic product, unemployment benefit claims, durable goods, pending home sales and Fed officials speech. Immediate resistance is located at 1.0942, a break above targets 1.0964. On the downside, support is seen at 1.0863, a break below could drag it below 1.0835 (10-DMA).
USD/JPY: The dollar declined as investor jitters were stirred on news that the new coronavirus could spread to New York. U.S. health authorities, managing 59 cases so far, warned of the potential for a pandemic. The major was trading 0.4 percent down at 110.01, having hit a low of 109.89 on Tuesday, its lowest since Feb. 19. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. prelim gross domestic product, unemployment benefit claims, durable goods, pending home sales and Fed officials speech. Immediate resistance is located at 110.56 (10-DMA), a break above targets 110.99 (5-DMA). On the downside, support is seen at 109.87, a break below could take it near at 109.61.
GBP/USD: Sterling steadied after tumbling nearly 1 percent in the previous session on concerns that Britain’s new finance minister Rishi Sunak’s budget announcement in March may disappoint those waiting for a pick-up in fiscal spending. Sunak is due to announce the newly formed government’s budget on March 11, however, some analysts are doubtful there would be enough increases in spending to stimulate the economy. The major traded 0.3 percent up at 1.2934, having hit a high of 1.3017 on Tuesday, it’s highest since Feb. 19. Investors’ attention will remain on the trade negotiations, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2946, a break above could take it near 1.2966. On the downside, support is seen at 1.2872, a break below targets 1.2848. Against the euro, the pound was trading down at 84.37 pence, having hit a low of 84.49 earlier, it’s lowest since Feb.11.
AUD/USD: The Australian dollar slumped to a fresh 11-year low after a report showed the number of new coronavirus infections outside China exceeded the number reported in China for the first time ever. Investors fear the coronavirus spread will disrupt the global economy as quarantines and other measures to halt its advance slow trade and industry. The Aussie trades 0.2 percent up at 0.6555, having hit a low of 0.6542 earlier, it’s lowest since March 2009. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.6591 (23.6% retracement of 0.6750 and 0.6542), a break above could take it near 0.6621 (38.2% retracement). On the downside, support is seen at 0.6528 a break below targets 0.6502.
NZD/USD: The New Zealand dollar plunged to a 4-month low after the country's finance minister said the government might need to step in with immediate fiscal stimulus if the virus outbreak became a global pandemic and tipped the global economy into recession. The Kiwi trades 0.1 percent down at 0.6290, having touched a low of 0.6283 earlier, its lowest level since Oct. 17. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6331 (23.6% retracement of 0.6487 and 0.6283), a break above could take it near 0.6361 (38.2% retracement). On the downside, support is seen at 0.6267, a break below could drag it below 0.6245.
Equities Recap
Asian shares plunged as the rapid global spread of the coronavirus sent investors seeking safety in safe-haven assets.
MSCI's broadest index of Asia-Pacific shares outside Japan slumped 0.5 percent.
Tokyo's Nikkei fell 2.1 percent to 21,948.23 points, Australia's S&P/ASX 200 index slumped 0.8 percent to 6,657.90 points and South Korea's KOSPI declined 1.1 percent to 2,054.89 points.
Shanghai composite index rose 0.1 percent to 2,991.33 points, while CSI 300 index traded 0.3 percent up at 4,084.88 points.
Hong Kong’s Hang Seng traded 0.05 percent lower at 26,679.93 points. Taiwan shares shed 1.2 percent to 11,292.17 points
Commodities Recap
Crude oil prices plunged to their lowest since January 2019 as a growing number of new coronavirus cases outside of China deepened fears that the global economy will slow and lower crude demand. International benchmark Brent crude was trading 1.3 percent lower at $52.69 per barrel by 0546 GMT, having hit a low of $52.54 earlier, its lowest since Jan. 2019. U.S. West Texas Intermediate was trading 1.2 percent down at $48.02 a barrel, after falling as low as $47.88 earlier, its lowest since Jan. 2019.
Gold prices rose, extending gains for the second straight session as the rapid spread of the coronavirus outside China fueled demand for safe-haven assets. Spot gold surged 0.6 percent to $1,651.29 per ounce by 0557 GMT, having touched a high of $1689.38 on Monday, its highest since January 2013. U.S. gold futures were up 0.4 percent at $1,650.10.
Treasuries Recap
The Australian government bond futures have been rallying for more than a week lifting the 3-year bond contract to 99.425, not far from the record top of 99.460. The 10-year contract added another 4 ticks to reach 99.1250, implying a yield of 0.8750 percent.
